Domestic Affairs

Prime Minister Stephen Harper’s centre-right Conservative Party won reelection on Oct. 14, 2008, in Canada’s third general election since 2004. (SeeMap.) The Conservatives won an increased minority in the House of Commons, taking 143 of 308 seats. The centre-left Liberal Party, under the leadership of Stéphane Dion, took 77 seats to retain its position as the official opposition but garnered its lowest share of the national vote (slightly over 26%) since confederation in 1867. On October 20, after only two years as Liberal leader, Dion announced that he would step down as soon as a new leader could be chosen. The separatist Bloc Québécois, under Gilles Duceppe, took 49 seats in the 75 constituencies that it contested in Quebec. The left-wing New Democratic Party, led by Jack Layton, increased its seat total from 29 to 37, and two independent MPs were reelected. Despite becoming the only major political party to increase the total number of votes that it received, the environmentalist Green Party, under leader Elizabeth May, once again failed to win any new seats and lost its first MP when Liberal-turned-Independent-turned-Green MP Blair Wilson of British Columbia was defeated. Voter turnout reached a historic low at 59.1%. Harper, who was first elected in January 2006, sought the new election in contravention of a law passed by his own government, which set election dates every four years. He explained that he found the existing minority government to be dysfunctional and wanted a fresh mandate to pursue his party’s agenda.

Harper’s reelection was a bright spot in an otherwise difficult year for the government as Conservatives faced several embarrassments and scandals. Following a series of missteps, Foreign Affairs Minister Maxime Bernier was forced to resign his cabinet post on May 26. Bernier had previously been criticized for promising to fly aid to hurricane-ravaged Myanmar (Burma) on military planes that were actually unavailable, for not knowing the name of the president of Haiti in spite of a long-term Canadian military mission in that country, and for compromising a quiet campaign by Canadian officials to get the Afghan government to replace a governor who was accused of corruption and of permitting torture in war-torn Kandahar province. The scandal that ultimately forced Bernier out of office, however, revolved around a romantic relationship. Bernier was attacked by opposition parties when news surfaced that a woman with whom he had been involved, Julie Couillard, had had previous relationships with Quebec’s biker-gang crime syndicate. Although the government initially defended his right to have a personal relationship with Couillard, Bernier submitted his resignation hours before Couillard went public with news that the minister had left confidential NATO documents at her home and had asked her to dispose of them. Couillard also claimed that she believed someone, probably a government security agency, had bugged her home and that Bernier had offered to help her secure a federal appointment in another ministry.

Harper came under fire in February after the author of a soon-to-be-published book on Independent MP Chuck Cadman released an audiotape interview from 2005 in which the Conservative leader appeared to indicate that his party had offered financial incentives to Cadman in an effort to persuade him to cast a vote of no-confidence in the previous Liberal government in order to trigger a general election. Conservative strategists speculated that Cadman, who was then in the late stages of terminal cancer, wanted to avoid an early election because he would lose his salary and medical benefits. Cadman’s wife confirmed that the MP, who died soon after the May 2005 vote, told her that the Conservatives had offered him a million-dollar life insurance policy in exchange for his deciding vote in an otherwise evenly split Parliament. Harper denied the claims, insisted that the audiotape had been altered, and sued the Liberal Party and its leader for libel for repeating the claims outside Parliament, where they did not have privileged legal protection. On October 10 an audio expert hired by the Conservatives testified that key parts of the tape had not been altered.

On November 27 Finance Minister Jim Flaherty tabled a fiscal update in the House of Commons that triggered an unprecented political and constitutional crisis. In spite of comments that Harper made at an international economic conference that suggested that he would strongly favour an economic stimulus package to combat a feared recession, and suggestions that he favoured a more cooperative and conciliatory parliament, the fiscal update promised no immediate major spending initiatives and included several proposals that the opposition parties argued were overtly partisan and unacceptable. The fiscal update would have eliminated public financing to political parties (a move that would have severely compromised the solvency of some opposition parties), placed a temporary ban on federal public sector strikes, and delayed the achievement of pay equity between men and women in the federal public service. Organizers for the Liberals and the New Democratic Party began to work on a formal coalition agreement, signed on December 1, to replace the Conservatives if their minority government lost the confidence of the House of Commons.

The Conservatives attempted to win back the confidence of Parliament first by delaying votes of confidence until December 8 and then by removing from their fiscal update the proposals regarding political financing and the right to strike. The finance minister also promised an early budget in January 2009 that would include a stimulus package if necessary. Nevertheless, the leaders of the coalition, Dion and Layton, refused to back down from their decision to defeat the government at the earliest opportunity. In an effort to delay the confidence votes further, Harper asked the queen’s representative, Governor-General Michaëlle Jean, to prorogue Parliament. Requests to prorogue parliament are ordinarily uncontroversial. However, the new session of Parliament had begun only two weeks earlier, and no legislation had yet been passed. Opposition critics called Harper’s move undemocratic and a desperate bid to save his own job and hold onto power, and some constitutional experts contended the move could set a dangerous precedent.

On December 4 Jean agreed to the prime minister’s request. A new session of Parliament would begin on January 26, quickly followed by the tabling of a budget and a subsequent vote of confidence in the government. Polls taken during the week of the crisis revealed a deeply divided Canadian public; although the coalition was found to be less popular than a continued Conservative minority government, Harper’s personal popularity suffered.

On June 11 the prime minister made a formal apology on behalf of the government and the country to former students of residential schools, which were operated by the government and numerous Christian churches from the 19th century until the last one closed in 1996. The schools were designed to remove aboriginal children from their families and communities as a part of an aggressive assimilation policy that sought to destroy First Nations’ culture and change their religious adherence and were often sites of physical, emotional, psychological, and sexual abuse. Although First Nations communities continued to suffer from the effects of generations of attacks on their culture and familial bonds, many aboriginal leaders accepted the apology and urged other Canadians to take notice of a truth and reconciliation commission in which survivors would tell their stories and to enter a new period of Canadian-aboriginal relations. Approximately 86,000 of the 150,000 residential school students were still living in 2008; they would share in a Can$2 billion government compensation package.

The Economy

The federal government, all 10 provinces, and the 3 northern territories presented balanced budgets with modest to large surpluses during the first half of 2008. In the wake of a global credit crisis and fears of a worldwide economic slowdown or recession, however, by October some governments were warning that budgetary deficits could quickly become a reality. Following years in which the federal government had made two consecutive 1% reductions in the national sales tax and numerous other targeted tax cuts and spending increases, Finance Minister Jim Flaherty on February 26 presented Canada’s smallest budget in 11 years. Major spending announcements included Can$1 billion over three years and Can$250 million over five years to assist the struggling manufacturing and auto industries, respectively; a Can$2 billion infrastructure investment fund; a tax savings account in which Canadians could deposit or invest up to Can$5,000 tax free each year; Can$500 million for public transit; Can$350 million for a Canada Student Grant program; and Can$330 million to improve access to safe drinking water in First Nations communities. Spending increased by only 3.4% in the 2008–09 budget—a significant reduction from the 14.8% rise from two previous Conservative budgets.

Although Canada had posted consecutive budgetary surpluses since 1998 and both Harper and Dion pledged during the election campaign to continue to present balanced budgets, two days after winning reelection Harper told reporters that the severity of the global economic crisis might force his government to run a deficit at some point during his term. Similarly, despite projecting a budgetary surplus in Ontario’s spring budget and balanced budgets until at least 2010–11, the province’s finance minister on October 22 announced an updated prediction of a Can$500 million deficit. One day later the Bank of Canada reported that the country was on the edge of a recession in which a recovery might be distant and not complete. The announcement followed a turbulent two-month period in which Canada’s stock market lost 20% of its value and was off by almost 40% from record highs set the previous year. The Canadian dollar also plunged below U.S.$0.80 in October following a 30-year high in 2007 in which it had closed above parity with the U.S. dollar. Consumer confidence hit 26-year lows as Canada’s commodity-based economy appeared vulnerable to the international downturn.

Foreign Affairs

The prime minister’s chief of staff, Ian Brodie faced intense criticism for his role in a leak that had ramifications in the U.S. Democratic presidential primaries. On February 27 the Canadian Television Network (CTV) reported that both Hillary Clinton and Barack Obama had made comments that suggested that the North American Free Trade Agreement (NAFTA) might be renegotiated if either candidate were elected president. Clinton denied the reports that day, and Obama denied the story two days later. On March 5 Canadian news reports disclosed that the initial leak had come from Brodie’s office during a prebudget media lockup. Brodie remarked to a reporter that, despite recent campaign rhetoric, Clinton’s campaign had assured the Canadian government that she did not plan to seriously renegotiate NAFTA if she became president. Brodie resigned for his part in the scandal. Foreign policy pundits suggested that the leak could hurt Canadian-American relations under a Democratic president.

Arctic initiatives, particularly strengthening Canada’s claim of sovereignty over its territorial northern waters for security and resource-extraction purposes, were high priorities. During August alone the government announced a state-of-the-art mapping program to identify energy and mineral development potential in the area, an expansion of the territorial waters that the Canadian military would patrol for pollution violations and for which it would require notification from entering foreign vessels, and a series of large-scale rehearsals for emergencies involving cruise ships, commercial vessels, and pleasure crafts. In August the Conservatives also held a historic first-ever federal cabinet meeting north of the 60th parallel as a part of Harper’s three-day tour through Canada’s northern territories.

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